Credit Card Debt’s Mighty Grip on Black America

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Credit card issuers have thrived in this financial terrain, creating lucrative schemes to accumulate profits off fees charged to those who string out payments over long periods of time, often several years.

Freeman’s study points out that the credit card industry is “the most profitable financial service in the United States.” Though credit card use has been declining in recent months, it still approaches $1 trillion in transactions per year.

Based on Census Bureau findings, there were an estimated 181 million cardholders in the U.S., according to CreditCards.com. Each cardholder has an average of 7 credit cards.

Generally banks issue credit cards through issuing agencies such as American Express and MasterCard. The top 10 credit card issuers control 90% of the market.

In the U.S. alone there were 48.9 million American Express cards, 171 million MasterCard credit cards, 123 million MasterCard debit cards, 269 million Visa credit cards, and 397 million Visa debit cards.

Eighty percent of American households possess credit cards. Worldwide  consumers carry more than 1 billion Visa cards – 1 for every 7 people on earth.

More than one in three African Americans (35%) reported having at least two credit cards in 2009. Over 90% of black families earning $10,000 to $24,999 accumulated credit card debt.

They, along with other Americans, cherish the ability to charge freely. Credit and debit card fraud is the No. 1 fear of Americans during the current financial crisis, according to the Unisys Security Index.  In fact, concern about fraud supersedes concern for terrorism, computer and health viruses, and even personal safety.

In 2008, there were 9.9 million victims of identity fraud in the U.S., and the total annual fraud was $48 billion.

In December, Americans carried an average of $4,284 on credit card statements, according to Experian, a credit monitoring company. The city with the highest card debt was San Antonio, with $5,177 due on average, followed by Jacksonville, Florida, at $5,115.

Nationally, 51% of blacks admitted to not paying all of their bills on time, while 26% of all Americans reported this.

The penalties for default are high. In January of 2010, the national average default APR stood at 27.88%, and the mean APR was 28.99%.

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